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To: Jeffrey S. Mitchell who wrote (8930)	9/13/2005 10:39:40 PM
From: scion	Respond to of 12465

Small Firms to Get Another Extension On Sarbanes Rule By DEBORAH SOLOMON Staff Reporter of THE WALL STREET JOURNAL September 13, 2005; Page A2 The Securities and Exchange Commission is expected to give small companies another year to comply with a Sarbanes-Oxley rule intended to improve controls over financial reporting, according to people familiar with the matter. The SEC, which in March agreed to a one-year delay for small businesses, plans to grant another yearlong reprieve later this month. The relief would give companies with market capitalization of up to $75 million until July 2007 to comply with the rule. An SEC spokesman declined to comment. The internal-controls rule, required under the 2002 Sarbanes-Oxley law, has been criticized by corporations and business groups as costly and burdensome. The rule requires that companies assess the controls they have in place to prevent accounting mistakes and fraud and have their external auditor attest to those controls. The assessment must be included in the company's annual report, along with a description of any "material weaknesses" found. Some of the most vociferous complaints have come from smaller businesses that say the rule squeezes their budgets and forces them to curtail hiring, slash spending on research and development, and consider moving work overseas. A recent survey of companies by Financial Executives International, a membership and advocacy group for financial executives, found that small companies expect to spend an average of $824,000 to comply with the rule. The average cost for all companies is expected to be $4.3 million, according to FEI. In response to complaints about the rule, the SEC established an advisory committee to examine its impact on smaller public companies. Last month, the committee recommended that the SEC give small businesses an extra year before required compliance, saying that companies were struggling to find resources to assess their controls in a timely manner. In a letter to SEC Chairman Chris Cox, the committee said the costs "have been far more expensive than originally forecasted and these costs are disproportionately larger for smaller companies." Separately, the SEC said it will give banks another year to meet registration requirements for brokers, extending the deadline until Sept. 30, 2006. The SEC said it doesn't expect banks to develop systems needed to comply with the rule until the agency finishes its own work in this area. Final rules have been held up for years amid opposition from banks and bank regulators that complain the SEC is overreaching. The SEC has struggled for years to finalize rules. Congress adopted the Gramm-Leach-Bliley Act in 1999, allowing banks to enter new lines of business and affiliate with other financial-services firms, including brokerage firms. It also repealed a long-standing exception that allowed banks to engage in securities activities without being regulated by the SEC as broker-dealers. Instead, the law specified that some securities business would have to be "pushed out" to brokerage affiliates while others could remain within the bank under new exemptions drafted by SEC. Sticking points include the ability of custodial banks to handle orders from clients, including investment advisers, compensation for bank trust departments, referral fees paid to bank employees who refer business to the bank's brokerage operation, and bonus compensation for bank employees. --Judith Burns contributed to this article. Write to Deborah Solomon at deborah.solomon@wsj.com1 URL for this article: online.wsj.com

To: Jeffrey S. Mitchell who wrote (8930)	9/13/2005 10:47:05 PM
From: scion	Respond to of 12465

Unleashed Activists Make NYSE Cower September 14, 2005 The last time I wrote skeptically about corporate social responsibility, I received a curt email from my mother. "So," she wrote, "corporations shouldn't be socially responsible?" Let me try again. The question isn't whether corporations have social responsibilities. The question is: Who gets to decide what those responsibilities are? Increasingly, clever activist groups, which have failed to achieve their goals through legitimate political means, are using the social-responsibility mantra to try to impose their will on companies. All too often, beleaguered companies are caving. The New York Stock Exchange is the latest example. Last week, a half dozen top executives from Life Sciences Research Inc., an animal-testing firm, arrived at the exchange to celebrate the new listing of their company, which was started in England a half-century ago and is widely recognized as one of the best in the business. The executives were ushered into the exchange's elegant dining room for breakfast, after which they expected to proceed to the trading floor for the opening bell. A bronze bull-and-bear statue had been prepared for the company's chairman, and bronze medallions had been prepared for the other executives. At the last minute, NYSE President Catherine Kinney entered the room. "There is no way to sugarcoat this," she said. "The New York Stock Exchange will not be listing Life Sciences Research today." TALKING BUSINESS Should the NYSE list shares in Life Sciences Research? Write to Alan Murray at business@wsj.com1. If you want to share your thoughts but don't want your letter published, please make that clear. Read other readers' comments here2. Why? Well, NYSE officials refuse to talk about it for the record, possibly because they are worried about lawsuits. But it's not hard to find the answer. Life Sciences Research, known in England as Huntingdon Life Sciences, has met all the exchange's listing standards. It has no known problems with its government regulators. It is in a legitimate business with about $175 million a year in sales that is valued by its customers and required by the government -- the FDA won't allow new drugs onto the market that haven't been tested on animals. The problem is that a group of activists are waging a determined campaign to shut the company down for mistreating animals. Shortly before last week's meeting, Win Animal Rights sent an email alert to 10,000 animal-rights activists, urging them to contact the NYSE. Later, another group published names, email addresses and phone numbers of a long list of NYSE employees on its Web site. Before you conclude that the NYSE is run by lily-livered mouse lovers, some background is in order. The activists targeting Life Sciences Research are serious. Some of their tactics verge on terrorism. Last year, a New Jersey grand jury charged the U.S. leaders of one activist group, known as Stop Huntingdon Animal Cruelty, with using its Web site to encourage "direct action" against people involved with the company. It says the Web site cited a list of top terrorist tactics, including: holding loudspeaker demonstrations at peoples' homes, putting abusive graffiti on their cars, spraying cleaning fluid into their eyes and sending letters that threatened to kill or injure spouses and children. The indictment is filled with alleged accounts of vandalism inspired by Stop Huntingdon Animal Cruelty. On April 2, 2001, for instance, one of the company's employees allegedly had rocks thrown through his home windows and his car overturned and vandalized in his driveway. Greg Avery of Stop Huntingdon Animal Cruelty says that the vandalism wasn't committed by members of the group, and that the group doesn't "encourage or incite illegal acts." The group has pleaded not guilty and the case is pending. The attacks aren't limited to company employees. The animal-rights group has had its greatest impact by targeting suppliers. "We have lost many vendors," says Richard Michaelson, chief financial officer of Life Sciences Research. Security firms, lawn-service firms and food-service firms all have found the company's account too hot to handle. Financial firms wishing to make a market in the company's stock have jumped into the fray, but then quickly retreated under attack. "We've had and lost over 50 different market makers," Mr. Michaelson says. After learning of this history, the NYSE balked -- not out of concern for the welfare of mice and beagles, but out of concern for the welfare of its own employees and their families. "The NYSE is the victim here," acknowledges Mr. Michaelson. Still, by succumbing to pressure, the NYSE is almost certainly encouraging such attacks in the future. What happens when the activists turn their attention to Covance Inc. and Charles River Laboratories Inc., two companies listed on the exchange that are in the same business? Or when they decide to target department-store chains that sell furs? And what happens when other activists, seeing SHAC's success, follow in its footsteps? If Life Sciences Research is violating laws, it should be prosecuted. If the laws protecting animals aren't strong enough, they can be strengthened. Groups like Stop Huntingdon Animal Cruelty shouldn't be allowed to take the law in their own hands. Are you with me, Mom? Should the NYSE list shares in Life Sciences Research? Write to me at business@wsj.com3. If you want to share your thoughts but don't want your letter published, please make that clear. Read other readers' comments here4. URL for this article: online.wsj.com